UAL Board Says It’s Looking at Options
The board of UAL Corp., under attack from an aggressive New York partnership that wants to replace it, said Monday that it was actively looking into alternatives for the company’s future.
Directors of the parent of United Airlines said options under consideration included an employee stock ownership plan, known as an ESOP, and a financial overhaul that would likely include a payout to shareholders.
The board said it authorized its financial adviser, First Boston Corp., to meet with anyone who wanted to buy the airline and to continue its discussion with Coniston Partners, the New York partnership that wants to replace UAL’s board.
The board’s willingness to enter discussions with outside investors might open the door for Los Angeles billionaire Marvin Davis, who is barred by a standstill agreement from making an offer under $300 a share. Davis, who triggered UAL’s takeover turmoil in August with an unsuccessful $240-a-share bid, has been quietly seeking support from United’s unions for a new offer.
One option mentioned by UAL, an ESOP, has been used successfully by other companies to repel takeovers. Polaroid, for example, gave its employees just under 15% of its stock earlier this year to ward off a threat from Shamrock Partners, the investment vehicle of Roy E. Disney.
UAL has experience with financial overhauls, having completed one two years ago to end an earlier takeover threat from Coniston Partners. UAL rewarded shareholders with a generous stock buyback and sold its hotel and Hertz rental car businesses to keep Coniston from ousting the board in 1987.
This time, Coniston says it wants to replace UAL’s board in order to reshape the company’s financial structure or sell it entirely. Coniston’s plans received a minor setback Monday, when UAL Chairman Stephen M. Wolf and director Frank Olsen, who is also chairman of Hertz Corp., said they wouldn’t sit on a Coniston board. The New York partnership wanted to retain those two directors.
But Coniston has support from Wall Street’s professional stock speculators who would benefit from any increase in UAL’s stock price. A spokesman for Coniston couldn’t be reached.
Coniston and Davis aren’t the only financial heavyweights interested in UAL. Earlier Monday, UAL’s shares jumped $3.75 to close at $193.25 in active trading on the New York Stock Exchange on reports that New York investor Saul P. Steinberg made a $4.8-billion offer for the airline.
Though Steinberg is interested in the company, a spokesman for Steinberg denied reports that he proposed a $220-a-share buyout that would give a 50% ownership stake to employees. “We have made no proposals to anyone concerned,” said spokesman Brian Martin.
Also interested in UAL is Robert M. Bass, a billionaire Texan whose investments include American Savings and Vons and who has talked with United’s pilots about a possible acquisition.
Another possible bidder is a coalition of United’s pilots, flight attendants and managers, led by Wolf. Last month, a $6.75-billion takeover bid from United’s pilots and senior managers fizzled when the group could not secure financing. The collapse of the $300-a-share buyout bid sent UAL’s stock reeling and sent tremors through the financial markets.
The Wolf group last month gave UAL’s board a second proposal valued between $220 and $240 a share. However, the board refused to consider the second Wolf group proposal, saying it wouldn’t accept an offer under $300 a share.
